Musings on World events from the perspective of a Social and an Economic Liberal.

Friday, August 15, 2008

What does Russia want?

Under the Tsars, Russian government was "autocracy, mitigated by assassination". Even after the State Duma was established in 1906, there was little restraint upon executive power. After the Bolshevik revolution, the dictatorship of the Communist Party was even less a government of laws. Untrammelled executive power under the psychotic Josef Stalin led to the Terror of the Purges and the creation of the camps described so powerfully by Aleksander Solzhenitsyn. Unlike the efficient German Nazis, few records were kept of the numbers involved, but millions were killed and tens of millions imprisoned under exceptionally harsh conditions.

The 1980s saw an attempt to escape that grim legacy, however the process of liberalisation led to the inevitable demise of a society and a state built on terror. This liberalisation and the fall of the Soviet Union is what Vladimir Putin has already characterised as the greatest "geopolitical catastrophe of the twentieth century". Moreover, Putin is the head of a network of individuals linked together by certain characteristics, of which the most important is a previous membership of the KGB, GRU or other secret organs of the Soviet state, the so-called "Security people", the Siloviki.

The Siloviki has ended the attempt to create a state of laws in Russia. Any interest deemed to be hostile to Kremlin interests, or those of the supporters of the Kremlin, is likely to be subject to arbitrary arrest and legal sanction without due process. Hence the fall of Yukos, whose ownership presumed to trespass upon the interests of Vladimir Putin. The harsh punishment of Khordokovsky, and mysterious death of the British head of the associated Bank Menatep, was an example to others, and also allowed the creation of state corporations under Kremlin control. Senior figures in Russian government- including Putin- were able to take significant stakes in these and to use them as further patronage. Across Russian oil and gas, then minerals and mining, and then other sectors, a network of favoured corporations has grown: Rossneft, Gazprom, Norilsk, Severstal and so on. The rule of the Siloviki is coterminous with the rule of the oligarchs, since they are now very largely the same people.

Within Russia a growing list of sectors have been deemed to be strategic. These now include, not just extractive industries, but land ownership, and now even the trading of grain. This list, like much else in Russia, is rather arbitrary- reflecting the interests of the Siloviki - rather than a concerted strategic plan. However disputes between individuals and groups of Siloviks do occur and this has led to a spate of assassination, including such figures as the Deputy Chairman of the central bank. Public debate has also largely been ended as independent media has been eliminated.

The failure of law within Russia has also meant that Russia has chosen to ignore most international legal agreements. Agreements concerning the creation of BP-TNK, for example are deemed enforceable only as far as BP has the means to physically defend itself- and the legal infrastructure of Russia does not support non-Russians. The Sakhalin-2 agreement was largely abrogated at Russian insistence. Some have argued that these agreements were unfair and that Russia has only been "taking back what is hers anyway". In fact this misses he point, the agreements were not particularly unfair and were freely entered into by Russian parties who still retain ownership interests. The message is clear: Russia does not consider herself bound by any agreement. Any legal agreement can be abrogated at any time and for any reason.

This is why inward investment into Russia is collapsing. The inability to enforce contracts and the absence of rule of law makes it highly problematic and potentially lethal to invest in Russia.

Despite this, the Russian economy has a veneer of prosperity. Since 2003, the price of crude oil has risen steadily. The result has been a transformation in the finances of the Russian Federation. After the domestic debt default of August 1998 (which co-incidentally destroyed the independent banking sector in the country) Russia's state finances have roared back to the point that Russia is now sitting on about $490 billion of reserves. This puts the country about third in the overall level of reserves, behind China and Japan and ahead of Taiwan. However, in sharp contrast to these other countries, Russia faces a significant infrastructure gap. The required investment is probably more than the total reserves by some margin. The Russian balance sheet is liquid, but not particularly strong.

The failure to invest adequately was a significant problem of the planned economy, and ultimately led to the economic breakdown of the Soviet Union. However for the great majority of the years since the fall of the Soviet Union, Russia too has been a net exporter of capital. Russian consumers have a great appetite for luxury foreign brands, and the demand for Russian manufacturing goods has fallen as they can not compete on quality and the high Rouble- the result of the oil boom has meant that they could not compete on price either. The industrial infrastructure of Russia is in a bad way. Less excusably, so is the physical infrastructure- electricity capacity, both generation and especially transmission is on the brink of a major failure, and little has been done to tackle this.

Russia also faces a health and demographic time bomb. Russia has a major IV drug use problem which has contributed to the country now having the largest growth rate in HIV infection in the World- higher than South Africa. This HIV/AID incidence is accompanied by a dramatic increase in multi-drug resistant TB, which is now the highest level in the World. Young men, conscripted into the Russian army have a more than thirty times higher chance of dying than in the British Army- and the British Army is in Afghanistan and Iraq! The brutality of the Russian conscript army is frankly horrifying. This extraordinary combination together with general alcoholism, smoking, poor diet and stress has contributed to a Russian male life expectancy of 54- an African level. The result is that Russia is losing people at a rate never seen in peacetime: over 600,000 a year, with the real prospect of a population fall of one third, from 145 million to 100 million by 2030. The only population generally immune to this fall is, ironically enough, the Chechens- who have large families and don't usually drink.

Despite the glitz of Moscow and St. Petersburg, the reality of infrastructure decay and demographic breakdown makes conditions for the average Russian pretty bleak. The large disparities in wealth is creating the conditions for radical militancy. The Kremlin, of course is well aware of this and has co-opted potential radicals to its quasi-fascist Nashi groups, who have been used to intimidate usually non Russian targets.

Fundamentally, the problem remains that Russia has failed to establish legal security within its borders. As a result, the Kremlin is hardly likely to worry too much when it comes to international law. Even if one accepts, and I do not, the moral equivalence of Kosova and South Ossetia and the Russian occupation of Georgia proper and the NATO bombing of Belgrade- the fact is that troops under Russian command are committing atrocities quite deliberately. The brutality is an act of policy intended to send a wide message. It is also a breach of every international law of war, from the Geneva Conventions to the United Nations Charter.

Occasionally, my friend Edward Lucas and I have asked ourselves what would happen if Russia, instead of threatening its neighbours, offered a friendly face and peaceful solutions. However I am beginning to think that this is to overlook one critical fact: Putin is serious when he says that he intends to restore the geo-political space occupied by the former Soviet Union. He therefore does not recognise any legitimacy in the current democratic governments in the former Soviet Empire. He truly intends- as he says- to restore that geo-strategic space, and he intends to eliminate any Western influence in that space- this includes bringing an end the democratic governments that are integrating or seeking to integrate with the West.

That Russia has legitimate international geo-strategic interests both within and beyond her borders is not in doubt. However, The West can not abandon the Baltic Countries, to which we are linked by friendship and by treaty. Indeed the threat to the Baltic may be be less, simply because it was the occupation of 1940 that insidiously undermined the legitimacy of the Soviet state, as Solzhenitsyn himself noted. The key targets then, after Georgia, are Ukraine and Moldova and the West must consider its strategic options in both these cases. In both, we should be aware that Russia- the lawless state- is likely, as it has done already, to use lawless methods. However it would be both a betrayal of our democratic values and an unwarranted concession to a hostile power to abandon Ukraine to Russian control.

Despite the shock of the violence in Georgia, the fact remains that the challenge of Putin's Russia is not of the same order as that from the Soviet Union- I have highlighted only some of the weaknesses that the Kremlin must face. Furthermore, the likely much weaker global economy has a disproportionate effect on Russia as energy prices fall rapidly. The demographic weakness of Russia is also substantial- there is therefore only a limited window of opportunity for Putin to play his zero-sum game with the wider world. China, in particular is gathering influence, not only in the central Asian states, but in Russia itself, and this too will reduce the freedom of manoeuvre that the Silovik state will have.

Furthermore, the corporate Russian state has increasing business interests beyond its own borders. Thus far the acquisition of international corporations has not been a particular problem. However, it is now clear that Western governments will examine this interests with increasing care. The lawless methods of Russia could be transferred to the West, and it is therefore right that these links should be checked. Nevertheless, the more money that Russia invests overseas, the more hostages she leaves against her own good behaviour. Sooner rather than later, isolation would also create serious problems for Silovik corporate entities.

After the humiliation of the West in Georgia, Putin has shown his hand- but it is one with many weaknesses, and the West can now assess its own strategic interests. A return to a policy of containment and limited isolation does seem the most likely short term policy, but the West understands the nature of the threat. At a time when we can finally begin to see a reduction in the military commitment to Iraq, if not yet in Afghanistan, the military overstretch of the US and UK will be reduced. We are vulnerable- but only for a short period, and permanent bases in the Baltic and the completions of US missile treaties in the region will underline to Russia the limits that the West will accept on Russian adventurism- and where a cold war becomes a hot one. The first priority mu be to unsure the early exit of Russian troops from Georgia proper, and since Russia does not intend to abandon Ossetia or Abhazia, to secure those borders completely.

For those full of hope that Russia too might one day become a democratic and open society, the last few year have been a tragic disappointment. "хотели как лучше, получилось как всегда" [they wanted to do as good as possible, but it turned out like always].

In the face of "like always"- we must respond to the challenge of a hostile, would-be expansionist and generally lawless state. I believe we can meet this challenge and that Silovik lawlessness and brutality can be successfully controlled.

3 comments:

It didn't take long for the "Putin is Hitler" analogies to start following the eruption of the ugly little war between Russia and Georgia over the breakaway Georgian province of South Ossetia. Neoconservative commentator Robert Kagan compared the Russian attack on Georgia with the Nazi grab of the Sudetenland in 1938. President Jimmy Carter's former national security adviser, Zbigniew Brzezinski, said that the Russian leader was following a course "that is horrifyingly similar to that taken by Stalin and Hitler in the 1930s."

Others invoked the infamous Brezhnev doctrine, under which Soviet leaders claimed the right to intervene militarily in Eastern Europe in order to prop up their crumbling imperium. "We've seen this movie before, in Prague and Budapest," said John McCain, referring to the Soviet invasions of Czechoslovakia in 1968 and Hungary in 1956. According to the Republican presidential candidate,"today we are all Georgians."

Actually, the events of the past week in Georgia have little in common with either Hitler's dismemberment of Czechoslovakia on the eve of World War II or Soviet policies in Eastern Europe. They are better understood against the backdrop of the complica ted ethnic politics of the Caucasus, a part of the world where historical grudges run deep and oppressed can become oppressors in the bat of an eye.

Unlike most of the armchair generals now posing as experts on the Caucasus, I have actually visited Tskhinvali, a sleepy provincial town in the shadow of the mountains that rise along Russia's southern border. I was there in March 1991, shortly after the city was occupied by Georgian militia units loyal to Zviad Gamsakhurdia, the first freely elected leader of Georgia in seven decades. One of Gamsakhurdia's first acts as Georgian president was to cancel the political autonomy that the Stalinist constitution had granted the republic's 90,000-strong Ossetian minority.

After negotiating safe passage with Soviet interior ministry troops who had stationed themselves between the Georgians and the Ossetians, I discovered that the town had been ransacked by Gamsakhurdia's militia. The Georgians had trashed the Ossetian national theater, decapitated the statue of an Ossetian poet and pulled down monuments to Ossetians who had fought with Soviet troops in World War II. The Ossetians were responding in kind, firing on Georgian villages and forcing Georgian residents of Tskhinvali to flee their homes.

It soon became clear to me that the Ossetians viewed Georgians in much the same way that Georgians view Russians: as aggressive bullies bent on taking away their independence. "We are much more worried by Georgian imperialism than Russian imperialism," an Ossetian leader, Gerasim Khugaev, told me. "It is closer to us, and we feel its pressure all the time."

When it comes to apportioning blame for the latest flare-up in the Caucasus, there's plenty to go around. The Russians were clearly itching for a fight, but the behavior of Georgian president Mikheil Saakashvili has been erratic and provocative. The United States may have stoked the conflict by encouraging Saakashvili to believe that he enjoyed American protection, when the West's ability to impose its will in this part of the world is actually quite limited.

Let us examine the role played by the three main parties.

Georgia. Saakashvili's image in the West, and particularly in the United States, is that of the great "democrat," the leader of the "Rose Revolution" who spearheaded a popular uprising against former American favorite Eduard Shevardnadze in November 2003. It is true that he has won two reasonably free elections, but he has also displayed some autocratic tendencies; he sent riot police to crush an opposition protest in Tbilisi last November and shuttered an opposition television station.

While the United States views Saakashvili as a pro-Western modernizer, a large part of his political appeal in Georgia has stemmed from his promise to re-unify Georgia by bringing the secessionist provinces of South Ossetia and Abkhazia under central control. He has presented himself as the successor to the medieval Georgian king, David the Builder, and promised that the country will regain its lost territories by the time he leaves office, by one means or another. American commentators tend to overlook the fact that Georgian democracy is inextricably intertwined with Georgian nationalism.

The restoration of Georgia's traditional borders is an understandable goal for a Georgian leader, but it is a much lower priority for the West, particularly if it involves armed conflict with Russia. Based on their previous experience with Georgian rule, Ossetians and Abkhazians have perfectly valid reasons to oppose reunification with Georgia, even if it means throwing in their lot with the Russians.

It is unclear how the simmering tensions between Georgia and South Ossetia came to the boil this month. The Georgians say that they were provoked by the shelling of Georgian villages from Ossetian-controlled territory. While this may well be the case, the Georgian response was disproportionate. On the night of Aug. 7 and into Aug. 8, Saakashvili ordered an artillery barrage against Tskhinvali and sent an armored column to occupy the town. He apparently hoped that Western support would protect Georgia from major Russian retaliation, even though Russian "peacekeepers" were almost certainly killed or wounded in the Georgian assault.

It was a huge miscalculation. Russian Prime minister Vladimir Putin (and let there be no doubt that he is calling the shots in Moscow despite having handed over the presidency to his protege, Dmitri Medvedev) now had the ideal pretext for settling scores with the uppity Georgians. Rather than simply restoring the status quo ante, Russian troops moved into Georgia proper, cutting the main east-west highway at Gori and attacking various military bases.

Saakashvili's decision to gamble everything on a lightning grab for Tskhinvali brings to mind the comment of the 19th-century French statesman Talleyrand: "it was worse than a crime, it was a mistake."

Russia. Putin and Medvedev have defended their incursion into Georgia as motivated by a desire to stop the "genocide" of Ossetians by Georgians. It is difficult to take their moral outrage very seriously. There is a striking contrast between Russian support for the right of Ossetian self-determination in Georgia and the brutal suppression of Chechens who were trying to exercise that very same right within the boundaries of Russia.

Playing one ethnic group off against another in the Caucasus has been standard Russian policy ever since czarist times. It is the ideal wedge issue for the Kremlin, particularly in the case of a state such as Georgia, which is made up of several different nationalities. It would be virtually impossible for South Ossetia to survive as an autonomous entity without Russian support. Putin's government has issued passports to Ossetians and secured the appointment of Russians to key positions in Tskhinvali.

The Russian incursion into Georgia proper has been even more "disproportionate" -- in President Bush's phrase -- than the Georgian assault on Tskhinvali. The Russians have made no secret of their wish to replace Saakashvili with a more compliant leader. Russian military targets included the Black Sea port of Poti -- more than 100 miles from South Ossetia.

The real goal of Kremlin strategy is to reassert Russian influence in a part of the world that has been regarded, by czars and commissars alike, as Russia's backyard. Russian leaders bitterly resented the eastward expansion of NATO to include Poland and the Baltic states -- with Ukraine and Georgia next on the list -- but were unable to do very much about it as long as America was strong and Russia was weak. Now the tables are turning for the first time since the collapse of communism in 1991, and Putin is seizing the moment.

If Putin is smart, he will refrain from occupying Georgia proper, a step that would further alarm the West and unite Georgians against Russia. A better tactic would be to wait for Georgians themselves to turn against Saakashvili. The precedent here is what happened to Gamsakhurdia, who was overthrown a year later, in January 1992, by the same militia forces he had sent into South Ossetia.

The United States. The Bush administration has been sending mixed messages to its Georgian friends. U.S. officials insist that they did not give the green light to Saakashvili for his attack on South Ossetia. At the same time, however, the United States has championed NATO membership for Georgia, sent military advisers to bolster the Georgian army and demanded the restoration of Georgian territorial integrity. American support might well have emboldened Saakashvili as he was considering how to respond to the "provocations" from South Ossetia.

Now the United States has ended up in a situation in the Caucasus where the Georgian tail was wagging the NATO dog. We were unable to control Saakashvili or to lend him effective assistance when his country was invaded. One lesson is that we need to be very careful in extending NATO membership, or even the promise of membership, to countries that we have neither the will nor the ability to defend.

In the meantime, American leaders have paid little attention to Russian diplomatic concerns, both inside the former borders of the Soviet Union and farther abroad. The Bush administration unilaterally abrogated the 1972 anti-missile defense treaty and ignored Putin when he objected to Kosovo independence on the grounds that it would set a dangerous precedent. It is difficult to explain why Kosovo should have the right to unilaterally declare its independence from Serbia, while the same right should be denied to places such as South Ossetia and Abkhazia.

The bottom line is that the United States is overextended militarily, diplomatically and economically. Even hawks such as Vice President Cheney, who have been vociferously denouncing Putin's actions in Georgia, have no stomach for a military conflict with Moscow. The United States is bogged down in Iraq and Afghanistan and needs Russian support in the coming trial of strength with Iran over its nuclear ambitions.

Instead of speaking softly and wielding a big stick, as Teddy Roosevelt recommended, the American policeman has been loudly lecturing the rest of the world while waving an increasingly unimpressive baton. The events of the past few days serve as a reminder that our ideological ambitions have greatly exceeded our military reach, particularly in areas such as the Caucasus, which is of only peripheral importance to the United States but of vital interest to Russia."